Change is the only constant thing in life. So, in a world that’s the epitome of unpredictable, it should then come as no surprise that most people take measures to protect themselves from the unexpected. This includes investing in car insurance.
Did you know that roughly 6 million accidents are occurring every year in the U.S? With an alarmingly high number like this, it’s essential to ensure that you have some sort of backup if you and your passengers were involved in a car accident.
While different states have an array of mandates for car insurance, most basic policies comprise different types of coverage that we shall delve into. Read on!
Personal Injury Protection Coverage
Required in more than 15 states, this type of coverage is instant and non-taxable up to the threshold set by your car insurance. It foots the medical bill of the passengers and driver of the policyholder’s car. It may also cover the following:
- Funeral costs
- Physical therapy
- Roughly 60-80% of your lost wages
- Funds to hire subcontractors to complete any outstanding projects you may have (if you’re a business owner)
Bodily Injury Liability
It covers the injuries that you and your passengers sustain in the accident. But, “Does my car insurance cover, other drivers?” Yes, your family and anyone else driving your car with your permission are covered by the insurance. So, it’s essential to have sufficient bodily liability insurance.
If you’re involved in a serious car accident, then there’s a chance that you’ll be slapped with a hefty lawsuit that can leave you swimming in debt. So, to avoid resigning yourself to this fate, purchase more than the state-required liability insurance, enough to safeguard your hard-earned assets and savings.
Property Damage Liability
This coverage steps in to foot the damage costs caused by you (or someone driving your car with your permission) to someone else’s property. It’s part of your car insurance. Typically, this includes hitting another party’s car, fences, mailboxes, buildings, telephone poles, fences, lamp posts, among other structures.
Collision and Comprehensive Liability
Liability insurance foots the costs of fixing the other driver’s car with whom you’re involved in an accident. However, comprehensive and collision liability pays to fix your car or reimburse its current value if it’s damaged beyond repair.
While this type of liability is not mandatory in most States, it may be a requirement from your lender if your car is leased or on loan.
- Collision coverage: It comes in handy if your car rolls over or rams into an object or another car
- Comprehensive coverage: It’s your saving grace if your car is stolen or incurs damages from other factors other than a car accident. So, this entails falling objects like trees, the elements, or collision with animals. And, if you’re wondering, “does my car insurance cover vandalism?” The answer is yes if comprehensive coverage is factored in your car insurance policy.
Both types of coverage come as a package deal and have a deductible thrown in the mix. So, settling for higher deductibles means lower premiums for comprehensive and collision coverage.
Underinsured and Uninsured Motorist Coverage
While liability insurance is a requirement in most states, there’s still a barrage of uninsured drivers on the road. Filing a lawsuit against them may seem like a viable option if you’re involved in a car accident with these drivers. But what you may not realize is that they may lack the funds to pay you for the damages and medical bills.
So, uninsured motorist coverage that’s usually part of your car insurance policy swoops in to save the day. It foots the costs of the medical bills that may be racking up, depending on the severity of your injuries.
Underinsured motorist coverage is strikingly similar to uninsured. However, it pays out if the other driver involved in the accident lacks sufficient liability insurance to cover all your medical bills.
Underinsured coverage kicks in once all the expenses stemming from the car accident surpass the other driver’s liability limits. Additionally, it’s a requirement in 19 states.
There’s a type of coverage known as Uninsured Motorist Property Damage (UMPD) that replaces your car altogether if it’s damaged beyond repair after an accident.
It’s the perfect answer to the question, “Does my insurance cover rental cars?”
When leasing or renting a car, gap insurance is usually factored in as part of the cost. It’s a lifesaver when the car is damaged beyond repair, and you owe more than the lease amount. So, it steps in to settle the difference between the car’s value and the amount you owe the company.
Things to Know When it Comes to Car Insurance
Now that you can comfortably answer the question “what does my car insurance cover?” below are other essential factors that come into play. They’ll steer you in the right direction when it comes to selecting the ideal car insurance.
- Does my credit card cover rental car insurance? – The coverage availed by most credit cards is usually for theft of or damage to the rental car. And, it kicks in after your car insurance pays up. This type of coverage is divided into two. Firstly, there is secondary, whereby you receive reimbursement for your car coverage deductible. Secondly, some credit cards offer primary coverage for rentals that entails you initially coming out of pocket without involving your car insurer.
- Does my insurance cover rental cars? – Usually, yes! Your primary car insurance will cover a rental car. For instance, factor in liability insurance that’s part of the package in car insurance. So, if you’re involved in a car accident with a rental car, then your liability coverage would swoop in to foot the damage costs of the other driver’s car.
- Does my car insurance cover me in another car? – In an unfortunate turn of you’re involved in a car accident in another person’s car. It may take a little longer for the insurance companies involved to sort who’s responsible for coverage. So, unless mitigating circumstances are clouding the matter, you’re ultimately covered by the car’s insurance.
- Does my car insurance cover towing a boat? – In a nutshell, yes, but only if towing coverage is included in your current car insurance policy.
While your car insurance can’t cover everything, the key to selecting the perfect coverage is to assess the different liabilities involved. In doing so, you’ll come up with the ideal deductible and auto insurance company. And, when doubts crop up, a qualified car lawyer can assist.
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